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What are the main reasons for the failure of startups and their liquidation?

What are the main reasons for the failure of startups and their liquidation?

Company  Quake Capital  as a startup accelerator with publishing on medium  reasons for the failure of startups  has expressed. On the one hand, this accelerator sees the excitement of young entrepreneurs and their hours of research, and on the other hand, it sees startups that have been left out due to poor teamwork, lack of budget and quality problems! Kwak Capital has stated the reasons by reviewing and evaluating thousands of startups; So you can safely trust these results. Earlier, another report was published by CB Insight, which introduces the most common  reasons for startup failures  .


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The most important  reasons for the failure of startups

1- Incorrect marketing (42%)

It is interesting to know that one of the most important  reasons for the failure of startups is the  lack of market. Lack of demand reduces the ability to survive in the market and leads to startup failure by increasing resource consumption   . Do you think that these products that you market to the market are really a vital need of the people? Is your product as useful and unnecessary as a vitamin pill or as a pain reliever and essential as a painkiller? It is rare for someone to go for vitamin pills. But who does not go for painkillers with a severe headache? The two are different from earth to sky.

2- Lack of budget (29%)

Many startups are struggling with a lack of funding. Without funding, you can not manage and lead the project. Of course, budget management is also an important issue. The budget may be large but wasted due to mismanagement.

3- Lack of a cohesive team (23%)

You must have heard the saying that the hardest thing to start at any startup is to put together a cohesive team; A team consisting of committed, motivated people with sufficient expertise and skills. Do not underestimate this issue, 23% of fractures are due to this seemingly simple issue.

4- High competition (19%)

When you come up with something out of the ordinary, then they have to re-think their position. With their credibility and financial power, they can push you away or at least reduce your importance. Of course, this is not always the case; For example, Google, with all its credibility and capabilities, failed to gain the popularity of messengers like Telegram in the world of messengers. Also, with a  lot of investment , Windows  has not yet been able to bring its browser to a position even close to Google. Of course, keep in mind that being first is a competitive advantage.

5- Incorrect pricing (18%)

Thinking about product prices has always been a challenging issue; The challenge that causes 18% of startups to fail! You need to offer a price to the customer that will both ensure the security of your  business and  satisfy the customer. Balancing the two is sometimes difficult and painful.

6- Low product quality (17%)

Some founders offer poor quality products to the user for various reasons. This causes consumer dissatisfaction and it means failure! It is very important to know the end customer and understand their needs well. A good product is not always what you think it is. Maybe something that is not attractive from your point of view is the same as attractive in the eyes of customers!

7- Lack of proper business model (17%)

Lack of a proper revenue strategy  , focusing solely on one revenue channel, inability to scale the project, and other such issues accounted for 17% of all failures. Design and  creative idea  you good even if the business model  (Business Model)  rightly attract investors will not be considered.

8- Lack of attention to marketing (14%)

Many people only focus on the product. They are so engrossed in the product that they forget that if the customer does not know about their good product, they will fail. Perhaps in the past, when competition and advertising volume were low, building a good product was enough to make money and there was little need for marketing; But in the current situation, if you do not market your product properly, you will easily get lost in the hype. This simple issue is the reason for the failure of 14% of startups.

9- Not paying attention to the customer (14%)

Bill Gates has a famous sentence:

“The most dissatisfied customer is the most important source of learning.”

Unfortunately, we see startups that do not care about customer feedback. Instead of focusing on product testing, optimization, and customer satisfaction, many founders do what they see fit. They have nothing to do with the customer. These people ride on donkeys and eat their own halva!

10 – Incorrect timing (13%)

 In an interview at TED, Bill Gross, the founder of Idealab, which has grown more than 100 companies,   outlined five essential factors for startup success. He surveyed hundreds of startups and found that one of the most important reasons startups  fail  is accurate timing. He  cites  the example of Airbnb , which started its startup when people were in a state of economic crisis and needed money. The spread of the product in such pure conditions caused people to flock to it to rent a house and earn money.

Clever people can learn a lot from failed startups with an analytical look!


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